Brazil's securities regulator, the Comissão de Valores Mobiliários (CVM), has created a working group to draft an experimental framework for tokenized securities. The framework will cover the registration, custody, trading and settlement of securities using distributed ledger technology. The regulator established the group to address practical concerns about how existing investor protection, recordkeeping and market infrastructure rules should apply when securities move on distributed ledgers. The review comes as Brazil's tokenized asset market has reached 12 billion reais, equal to roughly $2.34 billion, with debentures and commercial notes accounting for about $1.3 billion of that total. Brazil already applies securities law according to a token's economic characteristics under CVM's 2022 guidance, which clarified that blockchain use does not change whether an asset qualifies as a security.
CVM Establishes 60-Day Timeline for Initial Framework Proposal
The working group must send its first proposal to the CVM's board within 60 days of being formally installed. A broader review will run for 120 days, with a possible 30-day extension. The timeline gives the regulator a defined path for moving from internal review to a potential experimental framework.
The group includes 14 CVM departments and may consult government agencies, market associations, self-regulatory bodies and outside specialists. It will also review cybersecurity risks, international regulatory models and lessons from earlier sandbox programs.
Framework Addresses Custody and Settlement Infrastructure Challenges
The CVM's review is focused on the infrastructure around tokenized securities rather than the assets themselves. The framework will address how ownership is recorded, how trades are settled, how custody is handled and how market participants divide responsibility when a transaction fails.
Traditional securities markets separate key functions across exchanges, custodians, registrars, depositories and settlement systems. Blockchains can combine several of those functions inside one technical environment. This raises questions over who controls the official ownership record, how private keys are stored, when transactions can be reversed and who is liable if a system breaks down.
The CVM stated these details matter because they define how investor rights are protected after issuance. A tokenized security may look familiar from an economic point of view, but its custody, settlement and operational risks can differ from those in traditional market infrastructure.
Brazil's Tokenized Asset Market Reaches $2.34 Billion
Data from Brazilian tracking platform RWA Monitor show the country's real-world asset market is now around 12 billion reais, equal to roughly $2.34 billion. Debentures and commercial notes account for about $1.3 billion of that total.
The market size gives the CVM a reason to move before tokenized securities become too large for case-by-case supervision. Debt instruments are already an important part of Brazil's tokenized asset activity, and they sit close to the core of securities regulation because they involve investor claims, issuer obligations and secondary market liquidity.
CVM Plans Consultation with Government Agencies and Market Participants
The CVM has already tested blockchain-based issuance and secondary trading through its regulatory sandbox. The new working group will review those experiments as it considers a broader framework for securities issued, held and traded on distributed ledgers.
For exchanges, brokers, custodians and tokenization platforms, the working group could help reduce uncertainty around which licenses, controls and reporting duties apply. Firms building tokenized securities products in Brazil will need to show not only that the underlying asset is legally sound, but also that the infrastructure supporting it can protect ownership records, settlement processes and investor claims.
FAQ
What is the CVM's timeline for the tokenized securities framework?
The working group must send its first proposal to the CVM's board within 60 days of being formally installed. A broader review will run for 120 days, with a possible 30-day extension.
How large is Brazil's tokenized asset market?
Data from Brazilian tracking platform RWA Monitor show Brazil's real-world asset market is now around 12 billion reais, equal to roughly $2.34 billion. Debentures and commercial notes account for about $1.3 billion of that total.
What does the CVM framework cover?
The framework will cover the registration, custody, trading and settlement of securities using distributed ledger technology. The regulator will address how existing investor protection, recordkeeping and market infrastructure rules should apply when securities move on distributed ledgers.
